A Look at the Trademark Modernization Act - One Year in

• Jurisdiction: United States,Federal
• Citation: Vol. 47 No. 1
• Publication year: 2022
• Author: Jane Shay Wald
• topic: Trademark,Intellectual Property

A LOOK AT THE TRADEMARK MODERNIZATION ACT - ONE YEAR IN

AUTHORS

Jane Shay Wald
Irell & Manella LLP

Michael Tezyan
Irell & Manella LLP

In the second article of this three part-series on the Trademark Modernization Act of 2020 ("TMA"),¹ we discussed the proposed TMA implementing rules and the public comments to them, as well as an early round-up of judicial application of the rebuttable presumption of irreparable harm under 15 U.S.C. § 1116(a). The final rules went into effect on December 27, 2021. The USPTO appeared careful to take into account the public comments of law firm and in-house practitioners, and legal associations, including the American Bar Association, the International Trademark Association, and the American Intellectual Property Law Association. The final implementing rules reflect the public's concerns regarding philosophy and practice under the new expungement and reexamination procedures.

Following the TMA's enactment in December 2020, the USPTO published the Notice of Proposed Rulemaking (NPRM), held roundtable discussions, and solicited public comments prior to promulgating the final rules. For background on what was presented to the public for comment, and some of those comments, please see Part 2 of this series in the Winter 2021 edition. This article provides a brief overview of key provisions from the final rules, published November 17, 2021.²

EX PARTE EXPUNGEMENT AND REEXAMINATION PROCEEDINGS

The TMA introduced two new procedures for removing marks from the federal register, or canceling registrations as to particular goods or services. As discussed in greater detail in Part 2 of this series, ex parte expungement is a mechanism for removal of marks that have never been used in commerce at all, while ex parte reexamination targets marks that were not in use as of the applicable date.³ These procedures became available on December 27, 2021. The final rule irons out key aspects of

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the ex parte expungement and reexamination proceedings.

An ex parte expungement or reexamination proceeding can be initiated by filing a petition with the Director, or by the Director sua sponte. Upon filing of a petition, the petition becomes part of the registration file. At such time, the USPTO plans to send a courtesy email notifying the petitioner and/or the registrant. The petition must be accompanied by, among other things, the prescribed fee under 37 C.F.R. § 2.6(a)(26). The USPTO initially proposed a $600 per class fee in the NRPM. But multiple commenters expressed concern that the proposed $600 per class fee was too high, and thus would discourage would-be filers. In response to these comments, the final rule sets a fee of $400 per class for filing a petition for expungement or reexamination.⁴ The USPTO explained that this fee is intended to strike a balance between recovering the costs of such proceedings and providing a cost-effective alternative to a cancellation proceeding.⁵

With respect to requiring identification of the real party in interest or limiting the number of petitions—both potential methods to curb abusive filings—the final rule adopted a flexible approach. The TMA does not require a petitioner to have standing to file a petition for expungement or reexamination, nor does it require a petitioner to identify the real party in interest. The USPTO solicited feedback as to whether to implement such a requirement, but ultimately decided not to include such a requirement so as not to deter potential filers. The final rule does, however, make clear that the Director retains discretion to require the identity of the real party in interest if abusive filings are suspected. The USPTO also sought feedback as to whether it should place a limit on the number of petitions that may be filed, but again decided against imposing such a limitation after public feedback favoring a "wait-and-see" approach: "[E]xperience with these proceedings will inform the USPTO as to whether there are patterns of abuse in the filing of petitions for expungement or reexamination."⁶

The petition need also include a verified statement putting forth the "reasonable investigation" the petitioner conducted into use of the registered mark.⁷ As noted in Part 2 of this series, the USPTO provided in the NPRM a non-exhaustive list of potential sources for evidence of non-use to demonstrate the petitioner engaged in a "reasonable investigation," for example, state and federal trademark records, internet sources such as a registrant's websites or other media/publications or a registrant's marketplace activities, and public records.⁸ Responding to comments seeking additional clarity on the "reasonable investigation" requirement, the USPTO emphasized that the nature of this requirement is open-ended: "what constitutes a reasonable investigation is a case-by-case determination, and the USPTO will not provide specific guidance as to what types of evidence would comprise a reasonable investigation in a particular situation."⁹

An ex parte expungement or reexamination proceeding is instituted if the Director determines that the evidence collected as a result of the petitioner's reasonable investigation and the registration file establishes a prima facie case of non-use.¹⁰ Upon institution, notice will be sent to both the registrant and the petitioner—who from there on out will no longer be involved in the proceedings. The Director's decision to institute a proceeding is set forth in an office action which will require the registrant to provide evidence of use to rebut the prima facie case by establishing that the required use in commerce has been made.¹¹ The registrant can respond by either deleting the goods/services at issue from the registration or submitting documents evidencing use. The USPTO crafted the final rule to provide for a three-month response time for office actions issued in connection with expungement and reexamination proceedings, and to respond to concerns commenters had expressed that the two-month response period to the initial office action after an institution decision is made was too short given the challenges of collecting evidence of use and the delays due to the need to communicate between U.S. and foreign counsel

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for foreign applicants. The final rule also provides for a one-month extension (for a $125 fee) of the time to respond to a non-final office action in an expungement or reexamination proceeding.¹²

If the registrant's evidence of use is insufficient, the USPTO will issue a final office action with a non-extendable three-month time period for response. The registrant can, in response, file either a request for reconsideration or an appeal with the Trademark Trial and Appeal Board.¹³ If the registrant fails to file a timely appeal or a request for reconsideration that sets forth the relevant use in commerce, then the USPTO will issue a notice of termination and an order cancelling the registration, in whole or in part.¹⁴ Conversely, if the registrant establishes that the mark was used in commerce in connection with the connected goods or services, estoppel applies, and no future expungement or reexamination proceedings can be instituted as to those goods/services.¹⁵

NEW GROUND FOR CANCELLATION AT THE TTAB

In addition to the cancellation mechanisms above, the TMA created a new basis to seek cancellation of a registration in an inter partes Board proceeding, by which a petitioner may seek cancellation on the ground that the mark has never been used in commerce. This is similar to the ex parte expungement proceeding, but it occurs in the more traditional petition to cancel framework. This ground for cancellation arises any time after the three-year anniversary of the registration, presumably tracking to the rebuttable presumption of abandonment from three years of nonuse.¹⁶ To preclude cancellation, the respondent must demonstrate use in commerce or, with foreign-based registrations under Sections 44 (e) or 66(a), excusable nonuse.¹⁷ The intent of the respondent is irrelevant.

FLEXIBLE RESPONSE PERIODS TO OFFICE ACTIONS

The TMA authorized the USPTO to shorten time periods for responses to an office action from the current six-month time period for response under 37 C.F.R. § 2.62(a) to as short as sixty days. The USPTO crafted a compromise for the shortened time for responses to office actions that recognized the public's desire to clear the Register quickly, balanced against the realities of docketing and practicing on a new timetable. The USPTO has delayed implementation of this portion of the TMA until December 1, 2022 to allow for practitioners and the USPTO to adapt to the new response periods.¹⁸

The final rule amends 37 C.F.R. § 2.62(a) to set a three-month response period for office actions in applications under sections 1 and/or 44 of the...